The boss of one of London’s leading estate agency chains today warned about the impact of abolishing non-dom status on the top end of the capital’s property market.
Dominic Agace, chief executive of of Winkworth, was speaking as it was reported that Chancellor Rachel Reeves is having second thoughts about axing non-dom status - which allows wealthy people based in Britain to protect their foreign earnings and assets from UK tax - because it could trigger an exodus to other countries.
Officials at the Treasury and the Office for Budget Responsibility are said to be alarmed that the move could actually reduce the tax take by as much as £1 billion.
Agace said: “We are experiencing a lot of uncertainty at the top end of the market with high net worth individuals looking at their options. Uncertainty about the future trajectory of taxation, alongside stated policies is creating a growing negative UK sentiment.
“Non dom status removal was one trigger but this has only been exacerbated by the language coming from the Labour Government in advance of the October Budget. The feeling is that there will be several measures that will target non-doms and that they are not wanted here.
“With the level of wealth of these individuals, VAT on school fees in itself is not an issue but together with a perception of high knife crime rates in London, there is a growing movement among these high net worth people of where to move to. In the short term, this is halting investment and decisions to locate in the UK, as well as those living here bringing their houses to the market.”
Josh Grinling, of Winkworth’s Kensington office, said: “Some non-doms are moving to Monaco and Lisbon. Others are just going home back to Paris, Rome, and Madrid. Almost every other country now has a more welcoming tax package than is being offered in UK. Most countries see the benefit of rich people living there and the trickle down effect it creates for the economy. This new system is hollowing out central London.”
Another Winkworth prime central London agent says one of his clients is moving to Switzerland as a result of all the uncertainty.
Stephen Kenny, a partner in PKF Littlejohn’s Private Client tax team, said: “The news that the government is reconsidering its stance on the non-dom regime will be welcomed by many globally-mobile high net worth individuals - but it may now be too late, as significant damage has already been done.
“The government has been warned for some time that the abolition of non-dom status will not raise the amounts it wanted, so it’s not clear why it’s now suddenly looking to change tack.
“The number of non-doms in the UK has already been decreasing since the last round of changes in 2017, and the rate of departure has accelerated since the government’s original announcement.
“The scale of the proposed changes has meant that significant numbers of non-doms have decided that remaining in the UK is unfeasible, with many already relocating in anticipation of the changes.”“To attract non-doms to live and invest into the UK, the government needs to provide certainty over how they’ll be taxed. Announcing sweeping reforms to the rules without consultation and then, at the eleventh hour, rowing back on the changes doesn’t encourage confidence.
